Retail Picks Up Speed

Research & Forecast Report LAS VEGAS RETAIL Q2 2017 Retail Picks Up Speed > > Net absorption was strong in the second quarter of 2017, reversing a weak first quarter > > Vacancy decreased to 8.3 percent Economic Indicators RETAIL Employment RETAIL Taxable Sales RETAIL /Job > > Asking rental rates remained at $1.36 per square foot on a triplenet basis +4.7 +1.3% After a strong second half 2016, Southern Nevada s retail market suffered a weak first quarter of 2017. Fortunately, that down quarter proved to be temporary, as demand roared back to life in the second quarter. Things should improve even more by the end of 2017, with planned inventory growth and strong pre-leasing in those new projects. Vacancy decreased to 8.3 percent, and could dip below 8.0 percent by the end of the year. The asking rental rate for retail space in the second quarter of 2017 was $1.36 per square foot (psf) on a triplenet (NNN) basis, the same as it was one quarter ago. According to the Nevada Department of Employment, Training and Rehabilitation, Southern Nevada s retail job market suffered in April Historical Vacancy Rates and Asking Lease Rates 9.8% 9.6% $1.42 $1.40 Market Indicators Relative to prior period Q2 2017 Q3 2017* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE *Projected -3.7% Summary Statistics Q2 2017 Las Vegas Market Q2-16 Q1-17 Q2-17 9.4% 9.2% $1.38 $1.36 Vacancy Rate 9.2% 8.4% 8.3% 9.0% 8.8% $1.34 $1.32 Asking Rent (P, NNN) $1.30 $1.36 $1.36 8.6% 8.4% $1.30 $1.28 Net Absorption () -26,507-17,825 75,578 8.2% 8.0% $1.26 $1.24 New Completions () 23,705 53,589 0 7.8% $1.22 7.6% 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2016 1 Q 2017 2 Q 2017 $1.20 Overall Asking Rents Vacancy Asking Rental Rate Per Square Foot Power Center $1.49 $1.54 $1.63 Despite some headwinds created by the closure of some large anchor stores in Southern Nevada, the retail market is looking up. Community Center $1.26 $1.29 $1.29 Neighborhood Center $1.43 $1.49 $1.44 Strip Retail $1.17 $1.24 $1.25

2017 (the latest month of data available) compared with April 2016, losing approximately 2,900 jobs in the past twelve months. According to the government, retail jobs declined on a month-to-month basis in every month of this year except April, when they increased by 1,500 jobs compared to March. Unemployment in the Las Vegas-Paradise MSA stood at 4.6 percent as of April 2017, down from 5.9 percent in April 2016. From April 2016 to April 2017, total employment in Southern Nevada increased by 40,600 jobs. The Nevada Department of Taxation reports that Clark County s taxable retail sales for the past twelve months (April 2016 to March 2017, the most recent month of data available) totaled $29.2 billion, up from $28.1 billion in the previous twelve months; with sales of $4.6 billion in the automotive sector, $10.5 billion in food service and $13.7 billion in other retail (excluding gas stations). Historical Net Absorption vs. Completions 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0-50,000 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2016 1 Q 2017 2 Q 2017 Net Absorption Completions The highest year-over-year growth in taxable retail sales in April 2017 were in home and garden stores (21.7 percent growth), furniture stores (16.8 percent growth) and miscellaneous retailers (14.9 percent growth). Strong growth in the home and garden and furniture sectors points to increased population growth for Southern Nevada. Yearover-year taxable sales decreased in sporting goods and hobby stores (negative 5.3 percent), electronics and appliance stores (negative 4.3 percent growth), and food and beverage stores (negative 3.2 percent). Non-store retailers posted 12.0 percent year-over-year growth. There were no new retail completions in the second quarter of 2017. The market currently has 606,000 square feet of retail product under construction and scheduled to be completed by the end of the year. There were 1.7 million square feet of retail planned to begin construction within the next twelve months. Net absorption was 75,578 square feet in the second quarter of 2017, a notable improvement over the first quarter of the year, when net absorption dipped into negative territory. Among product types, net absorption was strongest in power centers, and was actually negative in community centers. This improvement of retail s fortunes occurred in the face of continued problems for anchor retailers, with K-Mart being the latest victim of downsizing. Net absorption was positive in three of the Valley s eight submarkets, including Southwest (67,184 square feet), Henderson (51,034 square feet) and North Las Vegas (12,859 square feet). Net absorption was negative in West Central (negative 22,526 square feet), Northeast (negative 13,728 square feet), University East (negative 11,148 square feet), Downtown (negative 6,193 square feet) and Northwest (negative 1,904 square feet). Strong multifamily development along the I-215 Beltway, stretching from Henderson to the Northwest, should stimulate demand for retail space over the next 12-24 months in the Henderson, Southwest and Northwest submarkets. Strong taxable sales growth has already been registered in home and garden and furniture stores, sectors stimulated by population growth. Occupancy vs. Retail Employment 84,000 83,500 83,000 82,500 82,000 81,500 81,000 80,500 80,000 79,500 79,000 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2016 1 Q 2017 2 Q 2017 Retail Jobs Occupancy Rate 92.0% 91.8% 91.5% 91.3% 91.0% 90.8% 90.5% 90.3% 90.0% 89.8% 89.5% 2 Las Vegas Research & Forecast Report Q2 2017 Retail Colliers International

Gross absorption of retail product totaled 790,448 square feet in the second quarter of 2017, higher than one quarter ago and roughly on the same level as the fourth quarter of 2016. Retail vacancy in Southern Nevada was 8.3 percent in the second quarter of 2017, a decrease of 0.1 points from last quarter and 0.9 points lower than one year ago. Southern Nevada s retail market has been expanding since 2012, though growth was slower in 2014 and dipped for one quarter in 2016 into negative territory. This gives us two periods of strong growth, from 2012-2013, and 2015 to present. Negative net absorption in the first quarter raised the possibility that the current growth cycle was in danger of ending, but this quarter s rebound makes that much less likely. Among submarkets, the Valley s highest vacancy this quarter was 12.6 percent in University East, while the lowest vacancy rate was 5.5 percent in the Southwest submarket. Vacancy decreased this quarter in Henderson, North Las Vegas and Southwest submarkets and increased in Downtown, Northeast, University East and West Central. The average asking rental rate for retail space in Southern Nevada was $1.36 psf NNN in the second quarter of 2017, the same as in the first quarter of 2017 and $0.06 higher than in the second quarter of 2016. Three submarkets saw asking rates increase on a quarter-over-quarter basis this quarter Downtown ($0.21 psf), North Las Vegas ($0.06 psf) and Southwest ($0.03 psf). Asking rates decreased in West Central ($0.05 psf), Henderson ($0.02 psf), Northeast ($0.02 psf) and University East ($0.01 psf). Asking rates were unchanged in the Northwest. Asking rents increased in power centers ($0.09 psf) and strip centers ($0.02 psf), remained unchanged in community centers, and decreased in neighborhood centers ($0.05 psf) over the same period. Single-tenant retail investment sales volume so far in 2017 was $72.2 million in 26 sales totaling 211,000 square feet. The average price per square foot was $342.23. So far, 2017 looks like it is shaping up to be a relatively weak year for single-tenant investments, more on par with 2013 than the past three years except in terms of average price per square foot and cap rate. In those areas, 2017 is in a much healthier position than the past four years. The average cap rate so far in 2017 was 6.6 percent, a compression from last year s 7.0 percent cap rate. Shopping center investment sales volume in the first half of 2017 was $402.6 million in 23 sales totaling 2.3 million square feet. The average price per square foot was $171.89, higher than in 2016 but a bit lower than in 2015. Shopping center sales in 2017 are well on pace to surpass previous hot markets in 2014 and 2015. Single-Tenant Retail 2013 2014 2015 2016 2017 YTD No. Sales 47 61 66 68 26 Square Footage Sold 719,000 643,000 981,000 572,000 211,000 Sales Volume $139.8 MM $187.5 MM $306.2 MM $176.6 MM $72.2 MM Average Price/ $194.55 $291.50 $312.00 $308.44 $342.23 Average Sale Size () 15,300 10,500 14,900 8,400 8,100 Cap Rate 7.2% 7.2% 7.0% 6.6% Shopping Center Retail 2013 2014 2015 2016 2017 YTD No. Sales 48 60 58 41 23 Square Footage Sold 3,192,000 4,025,000 3,195,000 2,528,000 2,342,000 Sales Volume $359.2 MM $504.5 MM $588.1 MM $419.7 MM $402.6 MM Average Price/ $112.52 $125.33 $184.08 $166.00 $171.89 Average Sale Size () 66,000 67,000 55,000 62,000 102,000 Cap Rate 8.9% 7.7% 6.7% 7.5% 3 Las Vegas Research & Forecast Report Q2 2017 Retail Colliers International

Chick-Fil-A has finally entered the Southern Nevada market and plans more stores in the future. Other retailers entering or expanding in Southern Nevada include Paul Mitchell, Discount Tire, Lolo s Chicken & Waffles, Chicken Shack, Café Rio, Five Guys Burger & Fries, Black Bear Diner, Wingnutz, Pei Wei, and Cheeburger Cheeburger. Target is introducing a new Target Express concept to compete with Dollar General or Walgreens, though no locations have yet been announced in Southern Nevada. Walmart is planning locations at Rainbow & Blue Diamond and Boulder & Russell, and Smith s Marketplace, a 125,000 square foot concept is looking into putting stores in the Skye Canyon and perhaps Cadence MPC. On the down-side, three K-Mart locations are closing in Southern Nevada, along with closures by Save-A-Lot discount groceries, Sports Chalet, Toys R Us, JCPenney, Macy s and Wal-Mart earlier this year. Despite some headwinds created by the closure of some large anchor stores in Southern Nevada, the retail market is looking up. A weak first quarter was followed by a much stronger second, putting the Valley on pace to chalk 2017 up as another year of retail recovery. The second half of the year will see significant new retail inventory with strong pre-leasing completed in Southern Nevada, which should boost net absorption numbers for the year as a whole, and contribute to continued decreases in the vacancy rate. Things should improve more by the end of 2017, with planned even inventory growth and strong pre-leasing in those new projects. Households (2017) Avg. HH Income (2017) Occupied Retail Space (2016 Avg.) Occupied Retail Space (2017 Avg.) Downtown 38,000 $41,000 2,010,000 1,958,000 Henderson 112,800 $86,000 9,537,000 9,526,000 North Las Vegas 75,200 $67,000 5,625,000 5,687,000 Northeast 82,300 $55,000 3,122,000 3,119,000 Northwest 181,600 $85,000 12,741,000 12,840,000 Southwest 99,000 $81,000 7,587,000 7,683,000 University East 108,100 $61,000 7,889,000 7,948,000 West Central 56,300 $53,000 6,303,000 6,406,000 Source of Demographic Data: Claritas 4 Las Vegas Research & Forecast Report Q2 2017 Retail Colliers International

Significant Retail Sale Activity 215 NORTH LAS VEGAS Rancho Sierra Shopping Center 318,000 - $13,180,000 $41.00/ NORTHWEST 95 April 2017 15 Red Rock 55,000 - $7,850,000 WEST CENTRAL DOWN TOWN NORTHEAST LAS VEGAS $143.00/ April 2017 Tropicana Nellis Shopping Village 95 84,000 - $7,100,000 $84.00/ UNIVERSITY AIRPORT May 2017 Pecos Plaza 215 97,000 - $3,600,000 $37.00/ SOUTHWEST HENDERSON April 2017 RESORT CORRIDOR Imperial Plaza 62,000 - $5,850,000 $94.00/ May 2017 Lease Activity Property Name Tenant Lease Date Lease Term Size Lease Rate Type Decatur Retail Center Game Changer Sports Apr 2017 38 months 20,000 $1.10 NNN Strip Retail Desert Inn & Durango Volta Lake Enterprises May 2017 72 months 5,400 $1.36 NNN Community Pecos Legacy Center Arthur Murray Apr 2017 60 months 2,700 $1.51 NNN Community 10575 Discovery Drive Insight Nevada Apr 2017 120 months 2,000 $2.31 NNN Strip Retail Pebble Marketplace Stabucks Apr 2017 60 months 1,400 $3.35 NNN Neighborhood 5 Las Vegas Research & Forecast Report Q2 2017 Retail Colliers International

Market Comparisons - Las Vegas Retail Market TYPE TOTAL INVENTORY DIRECT VACANT DIRECT VACANCY RATE SUBLEASE VACANT TOTAL VACANT VACANCY RATE CURRENT QUARTER VACANCY RATE PRIOR QUARTER NET ABSORPTION CURRENT QTR NET ABSORPTION YTD COMPLETIONS CURRENT QTR COMPLETIONS YTD UNDER CONSTRUCTION PLANNED CONSTRUCTION WEIGHTED AVG ASKING RENTAL RATE DOWNTOWN PC - - n/a - - n/a n/a - - - - - - $- CC 731,186 84,158 11.5% - 84,158 11.5% 11.5% - (6,135) - - - - $1.28 NC 588,070 105,933 18.0% - 105,933 18.0% 17.2% (5,000) (40,161) - - - - $0.92 SC 989,530 93,441 9.4% 1,960 95,401 9.6% 9.3% (1,193) (17,371) - 19,800-40,500 $1.41 Total 2,308,786 283,532 12.3% - 283,532 12.3% 12.0% (6,193) (63,667) - 19,800-40,500 $1.33 HENDERSON PC 2,896,215 69,281 2.4% - 69,281 2.4% 3.6% 35,910 29,960 - - - - $1.95 CC 2,714,168 172,716 6.4% 1,600 174,316 6.4% 6.2% (3,285) 14,982-33,789 - - $1.53 NC 2,930,045 328,323 11.2% 116,457 444,780 15.2% 16.2% 30,140 19,961 - - - 618,422 $1.41 SC 1,908,708 302,041 15.8% - 302,041 15.8% 15.4% (11,731) (37,457) - - 39,237 259,860 $1.15 Total 10,449,136 872,361 8.3% 118,057 990,418 9.5% 10.0% 51,034 27,446-33,789 39,237 878,282 $1.39 NORTH LAS VEGAS PC 774,065 31,986 4.1% - 31,986 4.1% 4.1% - - - - - - $2.25 CC 2,150,284 132,104 6.1% - 132,104 6.1% 6.5% 6,457 26,308 - - - - $1.55 NC 2,025,313 169,741 8.4% 7,089 176,830 8.7% 9.0% 9,737 (19,246) - - - - $1.57 SC 1,290,836 148,161 11.5% - 148,161 11.5% 11.2% (3,335) 26,121 - - - 122,718 $1.25 Total 6,240,498 481,992 7.7% 7,089 489,081 7.8% 8.0% 12,859 33,183 - - - 122,718 $1.51 NORTHEAST PC - - n/a - - n/a n/a - - - - - - $- CC 1,295,615 76,483 5.9% 20,114 96,597 7.5% 5.9% (19,122) (8,451) - - - - $1.45 NC 1,307,891 86,465 6.6% 62,301 148,766 11.4% 11.7% 4,125 (4,080) - - - - $1.46 SC 771,785 107,356 13.9% - 107,356 13.9% 14.1% 1,269 773 - - - - $0.86 Total 3,375,291 270,304 8.0% 82,415 352,719 10.5% 10.0% (13,728) (11,758) - - - - $1.22 NORTHWEST PC 3,171,110 220,994 n/a 1,400 222,394 7.0% 7.8% 26,454 15,034 - - - - $1.86 CC 4,800,446 135,446 2.8% 73,059 208,505 4.3% 4.1% (13,498) (5,347) - - - - $1.11 NC 3,419,506 282,005 8.2% 36,831 318,836 9.3% 9.2% (5,745) 7,057 - - 72,550 - $1.46 SC 2,450,000 244,589 10.0% - 244,589 10.0% 9.6% (9,115) 2,127 - - 26,220 31,000 $1.29 Total 13,841,062 883,034 6.4% 111,290 994,324 7.2% 7.2% (1,904) 18,871 - - 98,770 31,000 $1.46 SOUTHWEST PC 944,314 49,796 5.3% - 49,796 5.3% 5.3% - (3,700) - - - - $1.46 CC 2,483,783 105,196 4.2% - 105,196 4.2% 4.3% 2,500 990 - - 205,000 207,250 $1.74 NC 2,303,100 143,448 6.2% 7,276 150,724 6.5% 6.7% 8,444 9,559 - - 169,000 217,200 $2.03 SC 2,332,845 148,526 6.4% - 148,526 6.4% 8.8% 56,240 66,855 - - - 73,958 $1.60 Total 8,064,042 446,966 5.5% 7,276 454,242 5.6% 6.4% 67,184 73,704 - - 374,000 498,408 $1.76 UNIVERSITY EAST PC 1,210,223 123,864 10.2% - 123,864 10.2% 10.2% - (1,348) - - - - $1.19 CC 2,946,813 338,029 11.5% 28,955 366,984 12.5% 12.6% 2,884 (42,918) - - - - $1.03 NC 2,018,675 169,276 8.4% 182,349 351,625 17.4% 16.6% (16,545) (20,810) - - - 180,588 $1.38 SC 2,990,552 522,468 17.5% 6,200 528,668 17.7% 17.6% 2,513 5,963 - - - 19,124 $1.20 Total 9,166,263 1,153,637 12.6% 211,304 1,364,941 14.9% 14.8% (11,148) (59,113) - - - 199,712 $1.18 WEST CENTRAL PC 1,138,224 98,616 8.7% - 98,616 8.7% 8.1% (6,829) 15,582 - - - - $1.32 CC 1,673,939 215,561 12.9% - 215,561 12.9% 13.9% 16,714 32,610 - - - - $1.17 NC 1,777,642 118,160 6.6% 47,716 165,876 9.3% 8.5% (15,260) (3,711) - - - - $1.10 SC 2,170,564 160,522 7.4% - 160,522 7.4% 6.6% (17,151) (5,394) - - - - $1.15 Total 6,760,369 592,859 8.8% 47,716 640,575 9.5% 9.1% (22,526) 39,087 - - - - $1.18 MARKET TOTAL PC 10,134,151 594,537 5.9% 1,400 595,937 5.9% 6.4% 55,535 55,528 - - - - $1.63 CC 18,796,234 1,259,693 6.7% 123,728 1,383,421 7.4% 7.3% (7,350) 12,039-33,789 205,000 207,250 $1.29 NC 16,370,242 1,403,351 8.6% 460,019 1,863,370 11.4% 11.4% 9,896 (51,431) - - 241,550 1,016,210 $1.44 SC 14,904,820 1,727,104 11.6% 8,160 1,735,264 11.6% 11.7% 17,497 41,617-19,800 65,457 547,160 $1.25 Total 60,205,447 4,984,685 8.3% 593,307 5,577,992 9.3% 9.4% 75,578 57,753-53,589 512,007 1,770,620 $1.36 QUARTERLY COMPARISON AND TOTALS Q2-17 60,205,447 4,984,685 8.3% 593,307 5,577,992 9.3% 9.4% 75,578 57,753 0 53,589 512,007 1,770,620 $1.36 Q1-17 60,205,447 5,060,263 8.4% 580,286 5,640,549 9.4% 8.9% (17,825) (17,825) 53,589 53,589 446,550 1,183,806 $1.36 Q4-16 60,151,858 4,988,849 8.3% 354,423 5,343,272 8.9% 9.6% 234,591 900,447 65,851 240,625 523,506 1,385,706 $1.35 Q3-16 60,086,007 5,157,589 8.6% 639,448 5,797,037 9.6% 10.2% 408,766 665,856 71,069 174,774-1,564,516 $1.32 Q2-16 60,014,938 5,495,286 9.2% 618,699 6,113,985 10.2% 10.2% (26,507) 257,090 23,705 103,705 71,069 1,492,349 $1.30 Q1-16 59,991,233 5,445,074 9.1% 653,842 6,098,916 10.2% 10.5% 283,597 283,597 80,000 80,000 242,402 466,083 $1.30 Q4-15 59,911,233 5,648,671 9.4% 629,228 6,277,899 10.5% 10.5% 87,160 573,512 29,800 152,429 270,402 710,023 $1.30 PC = Power Center CC = Community Center NC = Neighborhood Center SC = Strip Center 6 Las Vegas Research & Forecast Report Q2 2017 Retail Colliers International

396 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111 $2.6 billion in annual revenue* COLLIERS INTERNATIONAL LAS VEGAS 3960 Howard Hughes Parkway Suite 150 Las Vegas, Nevada 89169 USA +1 702 735 5700 www.colliers.com/lasvegas MARKET CONTACT: Mike Mixer Executive Managing Director Las Vegas +1 702 735 5700 mike.mixer@colliers.com John Stater Research & GIS Manager Las Vegas +1 702 836 3781 john.stater@colliers.com 2.0 billion square feet under management 15,000 professionals and staff *All statistics are for 2016 and include affiliates. About Colliers International Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry-leading global real estate services company with more than 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 12 consecutive years, more than any other real estate services firm. For the latest news from Colliers, visit Colliers.com or follow us on Twitter (@Colliers) and LinkedIn. Copyright 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.